LCEC works with an independent consulting firm to complete a Cost of Service Study, analyzing the costs of service for our customer groups, including residential and business customers. The study incorporates all of LCEC’s costs to provide electric service, including a minimum rate of return required by our lenders, and then allocates those components as equitably as possible to all customers.
Customer Charge – Flat charge encompassing distribution costs as well as metering and billing.
Demand Charge – Flat rate calculated against the customer’s peak demand over the current billing period to recover capacity infrastructure costs. Also includes:
A Power Factor Adjustment (not currently in use), which calculates additional demand charges for each kW, when the customer’s power factor falls below 90%.
A Primary Service Discount, which provides a discount to the demand charge for customers who have invested in the purchase of their own transformer equipment.
A Demand Ratchet Component, which ensures that a minimum of 70% of a customer’s peak capacity costs are recovered even during times of low kWh usage.
Energy Charge – Inverted block rate and flat rates currently recovering approximately 2/3 of LCEC’s purchased power costs.
Load Management Credits – Monthly billing rebate for a customer who has enrolled in LCEC’s demand side management program; requires a minimum consumption of 500 kWh during the current billing period.
Interruptible Credit – Monthly rebate utilized by larger industrial customers that agree to shed a pre-determined and contracted minimum load at the request of LCEC during peak usage periods.
Power Cost Adjustment – Adjustment component utilized to ensure recovery of wholesale power costs.
Net Meter Rider – Rate components that allow for a net metering calculation where customer-generated kWh photovoltaic power is subtracted from the power delivered to them by LCEC.
Outdoor Lighting – Flat rates designed to recover costs for security lights, traffic signals, district street lighting, and decorative lighting purchased from LCEC.
The structure of the residential rates incorporates a fixed customer charge, a three-tiered inverted block rate, and a power cost adjustment. Below is the chart to indicate how LCEC rates compare with neighboring utilities.
The Benefits of a Three-Tiered Block Rate:
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